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SQUIDs in! Scammers pull the rug on Netflix inspired token

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By Jonathan Brogden & Millie Bailey


Published 03 December 2021


The anonymous creators behind the Squid Game inspired cryptocurrency have made off with an estimated £2.48m after performing a “rug pull” scam on investors. The project’s founders drew investors by relying on the rampant popularity of its namesake, drove the token’s price up via social media, then ceased all trading and made off with the funds. 




The token’s marketing was based on the popular Netflix series, Squid Game. It purported to be a “play-to-earn” token that could be used in online games where investors could earn more tokens, which could be exchanged for other cryptocurrencies or traditional national currencies. On 26 October 2021 the token was trading at only $0.01, but by the end of the week the token had surged to a peak value of $2,861. Media outlets across the globe were publishing stories about the new “Squid Game Cryptocurrency” and its sharp increase value, but in all the hype, no-one made it clear that this was not affiliated with the Netflix series.


The Fraud

The token was only made available for purchase on decentralised crypto exchanges such as PancakeSwap and DODO. In such decentralised finance (DeFi) markets there is no order book that matches buyers and sellers once the two parties agree on a price. Instead DeFi markets rely on a liquidity pool, which is effectively a pool of funds placed into a smart contract to provide buyers and sellers with a market to trade.

The SQUID token was built on the Binance Smart Chain platform and contained a backdoor which allowed the project creators’ to drain the liquidity pool before absconding, leaving the SQUID token effectively worthless. The token’s website, along with all other connected social media accounts, vanished overnight.

Binance has since released a statement confirming that it will investigate the scam and provide information to the necessary authorities. However, Binance made clear that as the Binance Smart Chain is an open source blockchain, they do not have control over projects built on the network.


Red Flags

The crypto market is in a period of peak speculation, with investors keen to acquire the latest coin predicted to surge in value. “To the Moon” is a popular and frequent rallying cry on social media channels where there is a proliferation of self-styled “experts” promoting various crypto assets. In such frenzied times, it is easy to miss the red flags that surround scams. To avoid rug pulls, the market must take note of the issues that were present in the SQUID token offering:

  1. Investors were unable to sell – No matter how much the token’s value jumped, investors were left with no ability to cash-out their holdings. If any cryptoasset restricts the ability to deal, then serious consideration must be given as to its legitimacy;

  2. The website and white paper were riddled with errors - Investors should ensure they review promotional materials, and consider whether the document appears well written and coherent in its offering as they would with any investment;

  3. The founders retained anonymity – Where the founders of a project remain anonymous, investors should consider their investment carefully given the inherent risk that an unidentified founder could more easily abscond with investor’s funds;

  4. The project had social media restrictions - The Twitter account for SQUID was restricted due to “unusual activity”, which implied problems were afoot. Consideration should be given to the project founders’ social media presence as it plays a significant role in generating interest in a new token;

  5. The token took advantage of a pre-existing brand – Any project like SQUID, which attempts to gain a sheen of legitimacy through copying the IP of another brand should immediately be viewed with suspicion; and

  6. The token was not available through major cryptocurrency exchanges - SQUID was only available on DeFi exchanges, which by nature do not provide for much in the way of regulatory oversight. A product is far less likely to be closely monitored if it does not operate on a recognised centralised exchange.


Fraud and the Call for Greater Regulation

Many crypto coins and tokens have obvious and meaningful utility. However, what determines movement in the value of crypto assets is not often understood or, indeed is it obvious or apparent. Scams like SQUID and OneCoin call into question the legitimacy of the market. Whilst entities like the Financial Action Task Force have sought to provide non-legally binding recommendations and guidance, crypto assets fundamentally sit in a regulatory grey area which means investors are offered little in the way of protection. Media reports of rags to riches stories by early adopters of crypto assets and the hype on social media channels for emerging projects and meme tokens is increasingly encouraging unsophisticated investors to buy crypto assets largely on the basis of fear of missing out on the next coin that goes “to the moon”.

Fraud is an ever present risk in all financial markets and cryptoassets should not be considered an exception to this. However, if crypto scams remain unchecked, the greater the damage will be to legitimate market participants.



Investors should carefully consider the totality of an investment in the crypto space, as the checks and balances which protect the market for traditional investments have not yet been replicated. The SQUID token exemplifies the ease through which fraudsters can take advantage of peak market speculation.

These types of scams have the effect of reducing confidence in the emerging crypto market and all legitimate market participants have an interest in addressing these scams. Regulators watching the space carefully and a continuation of these types of scams will inevitably lead to regulatory intervention.